Supplies and demand challenge clear picture for crop prices

USDA’s U.S. and global rice, corn, soybean, and cotton balance sheets continue to show formidable supplies and uncertain demand. Considerations for both bullish and bearish markets exist, and the attached slide show gives a good picture of the existing situation.

Visualization through the accompanying supply and demand slide show is all important to this article. Key slides have been replicated and moved to the front of the slide show for a condensed summary, Charts A1-A17, so please take the time to download and review by clicking the link at the bottom of this article.

The following is a list of bullish price considerations: first, U.S. production unknowns still remain elevated for rice, soybeans, and corn, due to lateness of planting caused by excessive rain and flooding during the planting season; second, concerns U.S. and global weather patterns will slowly erode U.S. and global production as the 2019/20 global production period progresses; third, hope remains ongoing trade talks will yield a return to more normal trade relations with China and other trading partners.

On the other hand there are also bearish price considerations: first, the late planting season experienced by rice, soybean, and corn producers will culminate in an extended growing season characterized by most producers having favorable weather through the harvest period; second, changing U.S. and global weather patterns during the 2019/20 marketing period have limited impact on global production, due to advances in production efficiencies and productivity; and third, trade negotiations especially with China will see limited progress and require ongoing negotiations into the future.

B1-B14. Eleven World Rice and Three United States Charts (metric tons)

C1-C19. U.S. Long and Medium Grain Rice Charts (million cwt.)

D1-D12. Select World and U.S. Soybean Charts (metric tons)

E1-E9. Select World and U.S. Corn Charts (metric tons)

F1-F9. Select World and U.S. Cotton Charts (metric tons)

G1-G9. Select World and U.S. Wheat Charts (metric tons)

Quite simply, the 2019/20 marketing period will continue to be a highly challenging business environment, so one’s production, financial and marketing advisors will be most critical to one’s 2019 business success.

No Crystal Ball

Since no one has a crystal ball or knows the future always consult an investment professional or professionals before making investment decisions. The world’s greatest speculators, investors and money managers are challenged by today’s global business environment.

Retired professor and extension economist after 37-years with the Department of Agricultural Economics and Agribusiness, University of Arkansas System, Division of Agriculture, Cooperative Extension Service